0% financing offers on cars in Canada

When shopping for a new car, you’ll come across advertisements with extremely low interest rates – sometimes even 0% financing offers. But you may be wondering if those offers are too good to be true? Before signing on the dotted line and driving off the lot, read this guide to learn the ins and outs of 0% financing. Plus, find out who is offering 0% financing on cars in Canada among some of the most popular car brands.

Who is offering zero percent financing on cars in Canada?

In Canada, you’ll often find specific dealerships or car brands offering 0% financing promotional offers. Unfortunately, 0% car finance offers will be much less common from banks and private lenders. That being said, you may find some private lenders, like Loans Canada, that offer 0% financing to those who can meet stringent eligibility requirements.

0% car loan from Loans Canada

• Rates from 0% - 31.99% (0% for new cars only)
• Borrow $500 - $35,000
• Compare offers from multiple lenders

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Check out the table below to see who is offering 0% financing on cars in Canada, or some of the lowest rate financing offers available, from popular car brands:

Offers last verified in May 2022

The types of financing offers advertised by dealerships will depend on where you live and a number of other factors. So when you’re ready to shop for your new car, check with your local dealerships to find out what financing offers are available at the time.

What does 0% financing mean on a car loan?

A 0% financing offer allows you to borrow money to buy a vehicle without having to pay interest and financing fees, which combined is known as the annual percentage rate (APR). This type of financing is mostly offered by dealerships as a way to sell more cars. It is usually reserved for customers who have excellent credit (usually above 700).

Banks or other lending institutions do not typically offer 0% financing on cars because these institutions have nothing to gain by offering them to you. On the other hand, a dealership will be more willing to offer 0% financing because at least you’re driving one of its cars off of the lot and moving inventory.

0% financing sounds too good to be true. What’s the catch?

At first glance, 0% financing on a car is exactly as it appears: You purchase the car at the agreed-on price, and then make monthly payments on the principal of the car with no interest for a set number of months. However, keep these points in mind:

• 0% interest may only be offered for part of the loan term.
• To be approved, you’ll need spectacular credit (above 700).
• Negotiating the car price will be difficult.
• 0% interest car financing is only available to certain models.
• You may not get as much money for your trade-in vehicle.
• The loan structure will likely be set in stone.

Pros and cons of 0% financing offers on cars

Pros

• 0% interest. Paying no interest on your car loan can save you hundreds or thousands of dollars in the long run (depending on your loan amount).
• One-stop shop for financing. Dealerships offer 0% interest car loans so you can get financing and drive off the lot in your new vehicle with a single transaction.
• Faster repayment. You’ll usually be able to pay 0% interest car loans off faster than you would with a traditional car loan (because terms are often shorter and there’s no interest).
• Lets you upgrade your car choice. You may be able to afford a more expensive vehicle or luxury upgrades such as a sunroof or alloy wheels with a 0% car loan.

Cons

• Only available from dealerships. 0% car loans are typically only offered by dealerships, which means you can’t get them from the bank or another lender.
• More limitations. You may only be able to get financing for certain kinds of vehicles with 0% car loans, such as those that the dealership is trying to move out of its inventory.
• More difficult to qualify. You can only qualify for a 0% car finance offer if you have good to excellent credit and a high income.
• Higher monthly payments. 0% financing often come with shorter terms to reduce the risk that you’ll default (which means higher monthly payments).
• Risk that you’ll pay more. You could end up paying a higher price for your vehicle to make up for the lower interest rate (so your dealer still cuts a higher profit).
• May be a limited offer. You may only get 0% financing for a portion of your loan amount or as an introductory offer for a limited amount of time.

How to get 0% financing in Canada

To get a 0% car financing in Canada, you’ll need to do your homework to make sure you get the best deal. Follow these steps to get started:

1. Check your credit score. Your first step in qualifying for a 0% car loan is to make sure your credit score is in excellent shape. You can do this by requesting a copy of your score from a major credit bureau such as Equifax or TransUnion.
2. Shop around. Decide which vehicle you want to buy in advance and then shop around with a number of dealerships to compare prices. This makes sure you find a dealership that’s offering a reasonable price for the vehicle you’re interested in.
3. Call the dealership. Call the dealership you choose to find out if it’s currently offer 0% financing on any models. If not, you can make your way down the list of dealerships you’ve compared until you find one that offers 0% car financing.
4. Gather your documentation. When it’s time to visit the dealership, you’ll want to bring along information about your credit score and monthly income. If your credit score is low, you likely won’t qualify for 0% financing and may need to explore other options.
5. Negotiate the deal. Work with your dealer to get the best deal possible on your loan. And keep in mind that there are always other options if your dealer won’t budge on certain conditions.

Red flags to watch out for with 0% car finance offers

There are a few red flags you’ll want to keep an eye out for when shopping around for a 0% financing in Canada:

• False promises. You should steer clear of lenders that offer 0% financing without checking your credit score or financial details.
• Higher vehicle prices. Avoid lenders that offer 0% car finance offers but have much higher vehicle prices than other dealerships in your local area.
• Introductory offers. Keep an eye out for deals that offer 0% financing for only a short introductory period but then start charging interest mid-way through your term.
• Bad customer reviews. Double-check online reviews for the lender you want to go with before you sign onto a loan contract to make sure there are no major issues.

Alternatives to 0% financing on cars in Canada

There are a number of alternatives to 0% financing that you might want to consider when shopping for your next vehicle:

• Low interest car loans. You’ll usually need a credit score of at least 660 to qualify (and your score will go down if you don’t make your payments).
• Guarantor loans. Guarantor loans may be a good way to get a car loan if you have a poor credit score. This involves asking a friend or family member with good credit to cosign with you so you can get lower interest rates.
• Online car loans. Online car loans let you compare interest rates from a number of different lenders all across Canada to find the best deal.

Compare car loans in Canada

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Name	Product	Loan Amount	Interest Rate	Loan Term	Min. Credit Score	Requirements
CarsFast Car Loans		$500 - $75,000	4.90% - 29.90%	12 - 96 months	300	Min. income of $2,000 /month, 3+ months employed	Get a new or used vehicle delivered to your door. Browse thousands of vehicles from dealers across Canada and get matched with financing that meets your needs.	Go to site More Info	Compare	loading Fetching your data...
Loans Canada Car Loans		$500 - $35,000	0% - 31.99%	24 - 120 months	300	Min. income of $1,800 /month, 3+ months employed	Compare rates from 60+ lenders. Complete a single application to get quotes from different lenders. Bad credit, CERB and EI borrowers considered. 0% APR for new cars only, used car rates start at 7.99%.	Go to site More Info	Compare	loading Fetching your data...
Coast Capital Car Loan		$10,000 - No Max.	Varies	18 - 84 months	650	Able to service debt payment of $300/month	Competitive rates and flexible terms. Finance new and used vehicles from one of Canada's largest credit unions. No credit union membership required. Available across Canada except SK, QC, NT, NU, YT.	Go to site More Info	Compare	loading Fetching your data...
Clutch Car Loans		$7,500 - No Max.	From 3.90%	12-96 months	580	3+ months employed, Max.1 bankruptcy	Pre-qualify for a loan in under 2 minutes with no impact to your credit score. Get approved for financing in under 24 hours for the used car you want. No hidden fees. Get the vehicle delivered to your door.	Go to site More Info	Compare	loading Fetching your data...
Canada Drives Car Loans		$7,500 - $99,999	4.75% - 29.99%	12-84 months	400	Min. income of $1,800 /month	Buy a used car online and get it delivered to your door in under 24 hours. Get pre-approved for financing in 3 minutes with no impact to your credit score. No fees or penalties for early loan repayment.	Go to site More Info	Compare	loading Fetching your data...
Carloans411 Car Loans		$500 - $50,000	1.90% - 19.99%	Up to 72 months	300	Min. income of $1,600 /month, 3+ months employed	High application approval rate. Get connected with suitable lenders to finance your next car, van or truck. Check eligibility for this loan through LoanConnect.	Go to site More Info	Compare	loading Fetching your data...
Canada Auto Finance		$500 - $45,000	4.90% - 29.95%	3 - 96 months	300	Min. income of $1,500 /month, 3+ months employed	Get financing from partnered local lenders. Financing for a new or used car is available for borrowers with bad credit, no credit, CERB, EI or bankruptcy.	Go to site More Info	Compare	loading Fetching your data...
Splash Auto Finance		$10,000 - $50,000	9.90% - 29.90%	24 - 84 months	300	Min. income of $2,200 /month, 3+ months employed	Apply with any credit score. Get financing for a new or used car. Auto loans for borrowers with fair credit, bad credit, no credit or bankruptcy.	Go to site More Info	Compare	loading Fetching your data...

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How to get a good deal without a 0% interest car loan

There are a number of things you can do to get a better deal on your next vehicle even if you don’t qualify for a 0% car finance offer. These include the following:

• Get pre-approved. It makes sense to get pre-approved for a car loan to find out how much you have to spend before you start shopping. This will give you a good bargaining chip to drive the price of your vehicle down when you get to the dealership.
• Compare prices. Shop around with multiple lenders to get the best rates on your loan. Once you know how much you have to spend, shop around with multiple dealers to find the best price on offer for the vehicle you want.
• Shop for a used vehicle. Check out online offers for used vehicles or ask to see the inventory of used cars with your dealer. Just be aware that it can be more difficult to get financing if the vehicle is older or has high mileage. Learn more about buying a used car.
• Look for sales or special offers. Wait for sales such as employee-pricing events or cash-rebate offers to save the most money on your car. This will let you drive off the lot with the best deal possible.
• Improve your credit score. Work on improving your credit to make sure you can qualify for the lowest interest rates available. Start by finding out what credit score you need to get approved for a car loan.

Can I get 0% financing if I have bad credit?

You usually won’t be able to get a 0% car loan if you have bad credit. This is because your lender will have to take a big financial risk by offering you a 0% car loan. It will want to make absolutely sure that you pay your loan back in a short amount of time, with zero chance that you’ll default on your payments.

What your bad credit tells your dealer is that you have a history of missing loan payments or defaulting on your financial obligations. The best way to get around this is to improve your credit score so that lenders see you as a reliable customer. Until then, you may end up paying higher interest rates to make up for the risk lenders have to take in giving you money.

Bottom line

Getting a 0% car loan can save you money on interest rates and let you pay your car loan off faster. The main downside of these loans is that they come with strict eligibility requirements and are usually only offered by car dealerships. Find out more about how 0% car loans work, and find out how you can qualify for this type of financing.

Frequently asked questions about 0% financing

• Do I need a down payment for a 0% financing?

  That depends on your lender. A down payment can help you pay your loan back much faster and it also shows your lender that you have savings. You can also make sure your car doesn’t depreciate beyond what it’s worth by making a large down payment.

• Can I get 0% financing for a used car?

  Almost never. If you’re offered a 0% car loan for a used car, you should read the fine print to see if there are any extra costs or fees to make up for the lack of interest being charged. It’s also possible that your dealer is overcharging you for the vehicle to make up for the 0% interest rate.

• Can I get 0% financing on new cars in Canada?

  Yes. You can usually get 0% financing on new cars in Canada if you have a good to excellent credit score and meet other eligibility criteria.

• What credit score do I need to qualify for a 0% car finance offer?

  You’ll usually need a credit score of at least 700 to even be considered for a 0% car loan. This number may be even higher depending on which lender you apply with.